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Companies Law - Case Laws
Showing 41 to 54 of 54 Records
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2018 (3) TMI 645
Validity of the Sale Agreement - Suit filed for Specific Performance of the Agreement for Sale - Whether the third defendant and other Directors obtained consent from the plaintiff before entering into the Sale Agreement dated 14.07.2005, being a major shareholder in the company? - applicability of Doctrine of Indoor Management - Held that:- This Court is of the considered view that the sale and lease of immovable properties of the third defendant company in favour of the first defendant company is not in compliance of Section 293(1)(a) of the Companies Act. No doubt, under Ex.P22-Minutes of the Board Meeting dated 24.06.2005, plant and machineries were also directed to be sold and for effecting such sale, the plaintiff in C.S.No.877 of 2005 has no objection and thus it appears that he has taken a contradictory stand. In the considered opinion of the Court, the sale of immovable properties as well as the plant and machineries either individually or collectively would fall within Section 293(1)(a) of the Companies Act and for effecting such a sale, consent/approval of the shareholders of the company is required.
Contention by the first defendant/plaintiff in that since major shares are being held by Manging Director and Directors of the company, their decision to sell the land and properties would amount to consent of majority shareholders, this Court is of the view that the said submission lacks merit in the light of mandatory nature of Section 293(1)(a) of the Companies Act and that apart, in the event of holding General Body Meeting, explanatory statement under Section 173 of the Companies Act is also to be enclosed with the notice for the meeting and as such, both the provisions have not been adhered to.
Also when there is a clear breach of a provision of a Statute, the Doctrine of Indoor Management cannot apply If a Statute prescribes a mandatory procedure, the same must be complied with at peril of the action being declared void for its non compliance.
Third defendant and other directors did not obtain consent from the plaintiff/Thakur J. Bakshani before entering into Ex.P6/Agreement for Sale dated 14.07.2005
No doubt, then Chairman of M/s. Nova Dyeing and Printing Mills Ltd. - Jagadish A. Sadrangani and other Directors, namely the defendants 4 and 5 had interest in the third defendant company at the time of entering into Ex.P6/Agreement for Sale, but the fact remains that the statutory mandates cast upon the third defendant company/M/s. Nova Dyeing and Printing Mills Ltd. under Section 293 (1)(a) of the Companies Act, have not been adhered to/complied with de hors their interest and in the light of the findings recorded by this Court regarding Issue No.1 in both the Suits, Issue No.3 has no relevance. The findings given by this Court in respect of Issue No.1 in both the Suits, and Issue No. 2 had sustained the legal plea that the procedures contemplated under Section 293(1)(a) of the Companies Act, have not been followed/adhered to.
The plaintiff, being a founder of the company, cannot question the validity of the Agreement for Sale/Ex.P6 dated 14.07.2005 and a shareholder is entitled to question the same on the ground that the mandates cast upon M/s. Nova Dyeing and Printing Mills Ltd./third defendant under Section 293(1)(a) of the Companies Act, have not been followed and the remedy, if any available at that point of time was that the approval/ratification by the General Body of the shareholders under Ex.P22 should have been obtained and admittedly, it was not done so.
If the Board Meeting under Ex.P22 would amount to signing of the shareholders of the company in the General Body Meeting for the reason that majority of the shareholders represent in their capacity as Director and Managing Director respectively, is of the considered view that they are entitled to presume that as per the Doctrine of Indoor Management, everything has taken place as per law and procedure and this Court is of the considered view that it is obligatory on the part of the first defendant as per the Memorandum and Articles of Association, to exercise due diligence and it has not been done.
Admittedly, in the case on hand, consent of the shareholders in the General Body Meeting has not been obtained and that by subsequent ratification also, the exercise done by the Board of Directors in that regard under Ex.P22 has not been ratified/approved. Adherence to Section 173 of the Companies Act is also mandated. In the considered opinion of the Court, the resolution passed by the company as per Section 192(4)(eee)(i) of the Companies Act requires ratification at the hands of the Registrar of Companies and it has not been done.
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2018 (3) TMI 644
Oppression and mismanagement - removal of directors - personal liabilities of the Directors towards the Bank - two Managing Directors of the company, one appointed by the Tribunal below and the other one already performing the duties of the Managing Director -
Held that:- We are not comfortable that the 1st respondent can be expected to look after the affairs of the 2nd respondent while also looking after the affairs of his own company which is in a competing business. We cannot think about any mechanism by which it can be ensured that 1st respondent who has now been appointed as Managing Director that he will not take care of his own company in the competing business unless he closes his business. Therefore, we are unable to uphold the Tribunal’s order in appointing as Managing Director (he was already director and continues to be). While appointing 1st respondent as Director cum Managing Director, no discussions has been made in respect of the Managing Director already performing the duties. Therefore, the Tribunal should not have appointed 1st respondent (petitioner in the company petition) as Director cum Managing Director of the 2nd respondent.
As the Tribunal has held that the acts of omission and commission of appellant and the 3rd respondent have caused losses to 2nd respondent and the 1st respondent is not liable for the losses that has been suffered by the respondent company if any loss has been occurred due to non-completion of these projects will be borne by the company and not an individual. The company should have made a thorough investigation that the loss has been occurred due to inactiveness/negligence of the appellant. The company should have also convened a Board Meeting to analysis the difficulty in non-completion of projects. The sub account accounts are consolidated in the name of company. One person cannot be held responsible for the same. The company is liable to the Bank. The Board of Directors of the company should have investigated and have settled the matter internally. Therefore, the interference in the matter on this issue by the Tribunal is unwarranted.
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2018 (3) TMI 561
Winding up petition - difficulties of non payment of the amount due and payable - Held that:- It is well settled that a contract of guarantee involves principally three parties namely the creditor, the surety and the principal debtor, where liability may be actual or prospective. Thus necessarily the ingredients of a contract of guarantee are clearly present in the option agreement which are reflected from the unambiguous nature of Article II the “Put Option” whereby the appellant has irrevocably, absolutely and unconditionally without demur or protest agreed to make payment of the exercise price to the respondent. If this be the case, then considering the provisions of Section 126 of the Contract Act, it is imperative to accept the 'option agreement' as a 'contract of guarantee'. There can be no other interpretation. Single Judge is correct in observing that the 'option agreement' is required to be considered as a guarantee.
By agreeing to Article IV (termination clause) and accepting that the agreement will be terminated only on the happening of said two events, it can certainly be said that the appellant had waived the right if any, to terminate the contract. The submission as urged on behalf of the appellant that by their letter dated 4 March 2015 the option agreement was terminated, if is accepted, then the consequence is that Article IV (Termination Clause) of the option agreement itself would be rendered nugatory and meaningless.
Whole intention of the parties to incorporate the termination clause as contained in Article IV is to bind the parties only in the stipulated and agreed mode of termination and in no other form or method. In fact what is pertinent is that the parties had categorically avoided to enter any other form of termination when they agreed to incorporate Article IV. Thus, the appellant's contention that in view of termination letter dated 4 March 2015 the “Put Option” could not have been exercised by the respondent is wholly untenable. The appellant's contention of the validity of the option agreement being considered by the learned Single Judge in the summary proceedings of a winding up petition, hence is wholly unfounded.
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2018 (3) TMI 560
Condonation of Delay Scheme -2018 - Removal of the Company from the Register u/s 248(1) - Held that:- The Registrar shall scrutinize the same, and if the same are found to be otherwise in accordance u/s 248(2), the petitioners would be granted the benefit of the CODS - 2018. Removal of the Company from the Register under Section 248(1) would be deemed as striking off the Company under Section 248(2), and the petitioner‟s application under CODS - 2018 would be sympathetically considered by the Registrar.
Since an unequivocal statement is made by the petitioners that they would pay the necessary charges and make the necessary application under the CODS - 2018, the impugned list of the disqualified directors, in as much as it includes the names of the directors, is stayed till 31.03.2018 or up till such time as the respondents take a final decision in the matter.
This order has been passed with due assistance of the learned ASG, in the peculiar facts and circumstances of these cases.
It is clarified that if the petitioners do not avail of the CODS-2018 or file the necessary documents as required for dissolution for the Company under Section 248(2) as stated above; in addition to other consequences, the petitioners would also be liable to be prosecuted for contempt of Court. It is further clarified that the aforesaid order is made on the basis of the unequivocal statements made on behalf of the petitioners above and in the event the statements are found to be incorrect, the petitioners would be liable to be proceeded against contempt of court in addition to being subjected to other proceedings.
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2018 (3) TMI 559
Oppression and mismanagement - settlement process - While some parties pressed for execution of the consent terms, other parties claimed breach and forfeiture, etc. The impugned order has disposed of those applications recording reasons. - Held that:- The learned counsel for both sides however, went on with their arguments relating to one party finding fault with the other and vice versa but did not satisfy us that Annexures ‘A’ and ‘B’ read together and defaults of parties, creates strange situations making execution of the terms unworkable and unpractical. Even if we accept that enforcing term 19 of Annexure ‘A’ would require certain compliances as is being argued, question is what is the way out? N.C.L.T. rightly appears to have searched way out in interest of Company and all stakeholders to have a fresh settlement or it would appoint Independent Committee of Management.
The directions are in interest of justice and cannot be faulted with. Under Section 424 of Companies Act 2013 NCLT can regulate procedure before it and while dealing with the matter, it could exercise inherent powers to do justice between the parties, the Company and public interest linked with the Company to give the directions it has given.
We do not find any substance in these appeals to interfere with the impugned Judgement and Order which needs to be maintained and implemented. Thus the appeals deserve to be dismissed.
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2018 (3) TMI 459
Winding up petition - Rectification by Central Government of register of charges - Held that:- It is observed by the Court that, the transaction, based upon which the Company Petition was presented, unless screened and declared, the order in respect of winding up of the Company does not deserve to be passed. The foundation of exercise of the discretion shall be, “neglect to pay due and agreed amount”. It is observed that since the Petition raises disputed questions and the writ petitioner i.e. Respondent No.1 is not remedy-less to recover the amount, and as such, the Court refused to entertain the Company Petition.
The instant Petition thus, does not deserve to be entertained, since the Respondent Company Law Board/the Regional Director, Western Region was within its rights in registering charge of Respondent No. 1, in pursuance to the Application tendered in that regard, in exercise of Powers under Section 141 of the Companies Act, 1956. The challenge raised by the Petitioner in the instant Petition does not come within the purview of Section 141 of the Act 1956, and it would be open for the Petitioner to raise the challenge relating to the documents, its enforceability, execution or the entitlement of the concerned Respondent to recover the amount from the Petitioner or defence in respect of bar of limitation, before an appropriate forum available in law.
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2018 (3) TMI 420
Winding up - Held that:- Petitioner’s entire claim in this application for the principal sum of ₹ 25,31,990.75/-, as mentioned in the notice dated September 03, 2016 is deemed to have been admitted by the company. In this application filed in the month of November, 2016 the petitioner has not disclosed any agreement entitling it to claim interest on account of unpaid bills. The petitioner is entitled to receive interest on account of the unpaid bills at the rate of 6%, p.a. from the month of December 20, 2016. As far as the defect pointed out that the petitioner has filed this application by taking out a notice of motion, the same is a matter of procedure. It is settled law that the procedure is the handmaid of justice and the defect in this application is cured by directing the petitioner to pay costs assessed at ₹ 10,000/- to the State Legal Services Authority.
Subject to payment of costs by the petitioner, as directed above within December 18, 2017, the winding up application is admitted for ₹ 25,31,990/-, together with interest thereon at the rate of 6% from the month of December, 2016. If, the company pays the amount of ₹ 25,31,990/- together with interest thereon at the rate of 6% from the month of December, 2016 to the petitioner within January 15, 2018, the winding up application shall stand permanently stayed.
In the event of any failure on the part of the company to pay the said amount within the time frame mentioned above, the petitioner will cause advertisement in the Bengali newspaper, “Bartaman” and English newspaper, “The Statesman”.
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2018 (3) TMI 359
Oppression and mismanagement - Syphoning of company money - misused Company Money by petitioner - Held that:- There is no evidence to support Petitioner that he was entitle to use Company money of ₹ 75 Lakhs for marriage of his daughter. The Resolution dated 25.04.2013 does not say so. Learned Counsel for Respondents rightly argued that Petitioner was changing stands on this count as, somewhere he claims he was authorized to use the money as 'advance', somewhere he seeks “adjustment” towards dues of 'Jewan Foods' while somewhere sought adjustment against dividend and yet somewhere that it was 'loan' he took. The Petitioner clearly misused Company Money giving lame excuses and deposited it only in 2013 when directed by C.L.B. Petitioner is thus not with clean hands and is not entitled to reliefs being claimed. Respondents claim that due to such conduct of Petitioner they were required to ask Bank not to allow withdrawals to Petitioner. It cannot be termed as 'oppression'.
We find substance in the submissions made by the learned Counsel for the contesting Respondents. Looking to the manner the Company Petitioner affairs were being conducted and the conduct of the Petitioner in selectively picking up disputes of the affairs of the Company Petition cannot be allowed to be entertained so as to put in difficulties other Respondents dealing with the Company. We have carefully gone through various records referred by NCLT in relation to the claims made by the Petitioner and we find that NCLT has rightly concluded that the Petitioner approached NCLT without clean hands and did not deserve reliefs as claimed by him.
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2018 (3) TMI 277
Secured creditor entitled to prefer a company petition for winding up - whether respondent Kotak Mahindra Bank shall wait till they exhaust their attempts to auction the properties mortgaged with them, recover the amount in question partly or wholly and then decide as to whether to file a company petition for winding up? - Held that:- After having a comprehensive view of the provisions and the judgments dealing with this issue, we are of the considered opinion that the secured creditors need not wait till the final outcome of the proceedings in case financier decides to proceed to enforce and realise the secured assets. The relevant provisions of the Companies Act are clear to state that to recover loan/amount advanced, the secured or unsecured creditors are entitled to approach Company Court under the provisions of the Companies Act by preferring a winding up petition.
We are informed by the Counsel appearing for the respondent that so far nothing has been paid to the respondents against the loan advanced to these appellants by the respondents. In the facts, we find that the learned Single Judge exercised reasonable discretion. The view adopted by the learned Single Judge is probable one. We do not find any perversity in the view. There is no merit in the appeals.
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2018 (3) TMI 201
Changes in scheme sanctioned - Held that:- Once a scheme is sanctioned and made effective, the changes allowed therein should be minor ones and not wholesale changes which would tamper with the essence of the scheme and if a company desires to modify a sanctioned scheme, though not necessary to do so for the proper working thereof, it is required to follow the procedure prescribed under Section 391 of the Act
It should be noted that when an order sanctioning a scheme under Section 391 of the Act is passed, it operates in rem. It affects the rights of several persons including creditors, investors, etc. and also creates liabilities in favour of persons like the Income Tax Authorities. These rights and liabilities became vested once the scheme becomes effective. The windmill business was transferred to Transferee and the Scheme was made effective by Transferee by filing Form 21 with the Registrar of Companies, Transferee having started earning revenue and having filed income tax returns, undoubtedly created rights and liabilities in favour of the Income Tax Authorities.
It should be noted that Transferee has filed returns for 3 years before this applications were filed. Therefore, these applications are not just for a simple or minor modification of the scheme. If the Court grants the prayers as sought, the net effect would be of recalling the order sanctioning the Scheme to the extent of windmill business. Just because certain tax benefits have been lost does not mean that the Scheme is not workable.
Hence no modifications are required. If the reliefs as sought are granted, would effectively amount to tampering with the essence of the scheme which is impermissible. The basic fabric of the Scheme would change and will go beyond the confines of what the Court while sanctioning the Scheme understood in the provisions of the Scheme.
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2018 (3) TMI 200
Transfer of shares - legal heirs eligibility - illegally transferred the shares owned by the petitioner without valid Transfer Deed and signature of the petitioner - Validity of company petition as time barred - Held that:- Respondent did not say that either they have informed the Petitioner at any point of time about the fact that her shares have been transferred in favour of the Respondent No.4 nor the Petitioner had knowledge about the transfer of her shares. The perusal of the pleadings reveal that the Petitioner has become aware about the transfer of her shares in favour of Respondent No.4 only on 14.7.2014, when her counsel has received the reply of her legal notice that was sent to the Respondents on 2.6.2014. Therefore, the objection of the Respondent pertaining to the issue that the Company Petition is time barred stands rejected, the petition has been filed on 26.8.2015, which is within the period of limitation.
Issuance of Share Certificate for 500 shares to the Petitioner - Held that:- Respondents did not discharge the burden of proof pertaining to their assertion of the fact that on allotment of shares, the Share Certificates were sent to the Petitioner. It is on record that the name of the 1st Respondent Company was changed, and as a matter of procedure, the old Share Certificates were to be called back and fresh Share Certificates had to be issued; but nothing has been placed on record that at any point of time, on change of the name of the 1st Respondent Company, the fresh Share Certificates were dispatched to the Shareholders including the Petitioner. Therefore, the Respondents failed to prove their claim that the Share Certificates were issued to the Petitioner by 1st Respondent Company.
There is even no shred of evidence to show that at any point of time the Petitioner has transferred her 500 shares to Respondent No. 4. Thus, the resolution dated 23.9.2009 passed by the Board of Directors of 1st respondent company to transfer 500 shares held by the petitioner in 1st Respondent Company is not based on any valid document, which is in violation of the provisions of Section 108 of the companies Act 1956. Therefore, the issue stands decided in favour of the Petitioner and against the Respondents.
The 1st Respondent Company and its Board of Director seem to have transferred 500 shares on the pretext that the Petitioner has availed loan of ₹ 50,000/- from late Mrs. Thangam, who was the mother of 2nd and 4th Respondents, because as per the statement of the Respondents, the Petitioner has denied to return the amount of purported loan. It has been stated in the Counter by the answering Respondent that Mrs. Thangam had given a loan of ₹ 50,000/- by way of cheque bearing No. 958482 drawn on ICICI Bank, Egmore branch dated 22.3.2005 to the Petitioner for allotment of 500 equity shares of the 1st Respondent Company, but the Petitioner did not issue any cheque to the 1st Respondent Company for allotment of 500 shares and the Respondents failed to prove the same, as has been asserted by them in para No. 8 of their Counter,
The legal heirs cannot stake claim over 500 shares owned by the Petitioner in 1st Respondent Company, on the ground that their late mother viz., Mrs. Thangam had advanced loan of ₹ 50,000/- to the Petitioner for purchase of 500 shares in the 1st Respondent Company. The legal heirs i.e. 2nd and 4th Respondents could have explored the possibilities of the recovery of the amount of loan, if any, by filing civil suit, before the court of competent jurisdiction. Therefore, the action of the 1st Respondent company to transfer 500 shares of the Petitioner to Respondent No. 4 is illegal and in violation of the provisions of Section 108 of the Companies Act, 1956.
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2018 (3) TMI 199
Oppression and mismanagement - Held that:- Original petitioner himself has restricted his challenge to the impugned allotments made in favour of the petitioner and original second and third respondents in the company petition. When this is so, the learned counsel for the appellant is rightly submitting that without amending the company petition and without giving particulars in their application for impleadment as to how and why the appellant is a necessary party, the impleadment could not have been allowed just for the asking.
From the paragraphs reproduced from CA 34/2016, it is apparent that it was quite a vague application. There appears substance in the submissions made by the learned counsel for the appellant that when there was no amendment sought in the company petition so as to make out a case against appellant and there were no sufficient pleadings in the application for impleadment, the impugned order as has been passed is not maintainable, at least against the present appellant. The others who have been added and have not come forward to challenge the impugned order we will not interfere as regards those other respondents who have been added.
The appeal is allowed, the impugned order is quashed and set aside as far as the impugned order is impleading the present appellant as respondent in the company petition.
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2018 (3) TMI 78
Production of the certificates on completion of the project - Corporate Debtor exercise the 'right of unpaid vendor lien' - Held that:- Arbitral Tribunal is conscious of the fact that in case the Corporate Debtor departs with the certificates of the completion of the Project, there may be financial implications. The Arbitral Tribunal while passing the order observed that "an interim direction is to avoid any controversy on the aspect, whether all the certificates obtained and in the custody of the claimant are made available. Further, the question whether any condition regarding the payment of the amounts said to be due to the claimant, after the initiation of Arbitration Proceedings, has to be imposed, may have also to be considered". In view of these observations, the Applicant may raise the issue before the Arbitral Tribunal for consideration.
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2018 (3) TMI 26
Compounding of alleged offence for violation of Sections 96 and 99 of the Companies Act, 2013 - Held that:- This court possesses necessary jurisdiction to grant permission for compounding of such offence in those cases wherein no punishment of imprisonment or punishment with fine alone. Which is not the case of present petitioner as the contravention of the provision of Sections 96 and 99 of the Companies Act are not attracting punishment of imprisonment and imprisonment with fine. It is a is statutory violation in technical nature attracting penalty of fine simplicitor.
The ground made for and submission put forth before us for compounding the alleged offence of contravention of Sections 96 and 99 of the Companies Act, 2013 appears to be reasonable and the court in exercise of its power conferred under section 441 of the Companies Act, 2013 can grant permission for compounding.
The present application deserves to be allowed. However, the permission for compounding such offence is granted with such condition, that the petitioner Company shall make payment of fine of ₹ 20,000/- (Rs. Twenty Thousand) and further individual Directors/Applicants shall have to pay fine of Rs. l0000/- (Rs. Ten Thousand). Such amount of fine shall be payable to Central Govt. through the office of the RoC, from the account of petitioner company and or individually by its the then Director, which may be practicable for implementation of this courts direction. The petitioner company make payment of additional fine of ₹ 100 per day for causing delay in convening of its AGM to regularise the delay cause in convening of the AGM for 2016.
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